ASIC secures win in Court action against Mayfair 101
The Australian Securities and Investments Commission (ASIC) has succeeded in its legal action against the Mayfair 101 Group. The Federal Court has determined that companies in the Mayfair 101 Group made statements that were false, misleading or deceptive in advertisements for its debenture products. The ruling follows the launch of proceedings by ASIC in April 2020.
The Court found Mayfair Wealth Partners Pty Ltd trading as Mayfair Platinum, Online Investments Pty Ltd trading as Mayfair 101, M101 Nominees Pty Ltd and M101 Holdings Pty Ltd, engaged in misleading or deceptive conduct, and made false or misleading representations, by representing that:
- Mayfair’s debenture products were comparable to, and of similar risk profile to, bank term deposits, when Mayfair’s debenture products exposed investors to significantly higher risk than bank term deposits (Bank Term Deposit Representation);
- the principal investment would be repaid in full on maturity, when investors might not receive capital repayments on maturity, or at all, as Mayfair could elect to extend the time for repayment for an indefinite period of time; and
- Mayfair’s debenture products were specifically designed for investors seeking certainty and confidence in their investments and therefore carried no risk of default, when there was a risk that investors could lose some, or all, of their principal investment.
The Court also found Mayfair Platinum, Mayfair 101 and M101 Nominees engaged in misleading or deceptive conduct and made false or misleading representations by representing that the M Core Fixed Income Notes were fully secured financial products, when funds invested were:
- lent to a related party and not secured by first-ranking, unencumbered asset security or on a dollar-for-dollar basis or at all;
- used to pay deposits on properties prior to any security interest being registered; and
- used to purchase assets that were not secured by first-ranking, unencumbered asset security.
In this action, ASIC is seeking pecuniary penalties, injunctions and corrective advertising. A penalty hearing is yet to be listed by the Court.
Let’s recall that, in February, the Federal Court ordered the winding up of M101 Nominees Pty Ltd. This is the entity which issued secured debentures promoted by Mayfair 101 known as M Core Fixed Income Notes.